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Neath Port Talbot's funds remain locked in Icelandic banks over legal wrangle

May 2011

Source: South Wales Evening Post

MILLIONS of pounds of taxpayers' money frozen in Icelandic banks for three years will remain there until at least this autumn because of ongoing court action.

Neath Port Talbot invested 20 million in four banks before the system failed in 2008.

So far two of the four have between them returned just over 6 million but the other two have not repaid a penny.

And there is little chance of the council seeing any of the 8 million tied up in the non-payers until late autumn or early winter because of a legal wrangle.

Neath Port Talbot finance director Derek Davies said: "Two of the banks are based in the UK and are administered under Scottish or English law and we are rec- eiving quarterly dividends from them.

"In relation to the two in Iceland, we have had nothing back as yet because there is a legal challenge.

"Under Icelandic law, local government investors have preferential status, so whatever assets the bank has goes to them first, and whatever is left goes to non-preferential creditors.

"The administrators determined that we have preferential status, but the non-preferential creditors took it to court.

"The court judgement was announced last month and found in our favour. But, exactly as predicted, the other creditors have appealed.

"It will now go to the appeal court, probably in September. If we lose the appeal it will make a significant impact on recovery but at the moment it is going as predicted and we do expect to win."